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Confronting the Representative Consumer with Household-Size Heterogeneity

Listed author(s):
  • Christos Koulovatianos

    ()

    (CREA, Université du Luxembourg)

  • Carsten Schröder

    ()

    (DIW, Free University of Berlin,)

  • Ulrich Schmidt

    ()

    (IFW, University of Kiel)

Most simulated micro-founded macro models use solely consumer-demand aggregates in order to estimate deep economy-wide preference parameters, which are useful for policy eva- luation. The underlying demand-aggregation properties that this approach requires, should be easy to empirically disprove: since household-consumption choices differ for households with more members, aggregation can be rejected if appropriate data violate an affine equa- tion regarding how much individuals benefit from within-household sharing of goods. We develop a survey method that tests the validity of this equation, without utility-estimation restrictions via models. Surprisingly, in six countries, this equation is not rejected, lending support to using consumer-demand aggregates.

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File URL: http://wwwfr.uni.lu/content/download/73225/919545/file/2014-13_Confronting%20the%20Representative%20Consumer%20with%20Household-Size%20Heterogeneity.pdf
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Paper provided by Center for Research in Economic Analysis, University of Luxembourg in its series CREA Discussion Paper Series with number 14-13.

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Date of creation: 2014
Handle: RePEc:luc:wpaper:14-13
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